2013.04. Elliot Wave Theory vs. Fundamental Market Timing. Robert R. Prechter convincingly argues that traditional assumptions are completely wrong about the stock market having any direct correlation to fundamental values such as earnings, oil prices, interest rates, gold prices, etc. Prechter concludes that the only significant factor driving stock market trends is a "herd mentality." His promotional video is worth seeing and can be found at elliottwave.com/club/how-market-losers-think-prechter-video.aspx. However, this video basically lists disjointed excepetions to rules under the assumption that exceptions disprove the rules of fundamental market timing. There is also no mention of backtesting to indicate that Prechter's "Elliot Wave" theory might be any more effective.

A highlight of Prechter's presentation was in the following fact: that just before the 2008 crash, the average broker, managed account and hedge fund was maxed-out in investments--and at the valley, the same top-notch experts were all maxed-out in cash. This is interesting but somewhat one-sided. Another way of looking at this data is that the existence of above-average maxing-out is simply what makes market peaks into market peaks. If the maxing-out were less the peak would be less or if more the peak would be more. Nonetheless I essentially agree with Prechter's conclusion that whether the rational capability is high or low, the "herd mentality" triumphs. Where I disagree is in allowing myself to be herded into an Elliot Wave subscriber on such scant rational evidence.

2013.03. FDIC insured deposits are not safe! In the event of a financial meltdown, the F.D.I.C. will enable banks to replace your cash with stock market shares, which will be worthless. Only US Treasuries, bought individually, are relatively safe. US Treasury TIPS, bought individually, include additional safety against a sudden drop in value of the US dollar. Do not use ETFs or mutual funds for US Treasuries, because they lack the ability to hold to maturity if trading values plummet.

Merrill Lynch has decent research tools available to me but they did not offer a way to research the stocks the way I wanted to, looking for combinations of different technical indicators. But fortunately I stumbled on 'Stock Fetcher', a website that allows you to assemble your own search strings of technical indicators. The cost for 3 months is about $8.50 a month (I pay quarterly). It does more than VV at a fraction of the cost. The site is bare-bones; no fancy presentations, but the 'Standard' subscription package does far more than I would ever need. They have a lot of standard pre-assembled search strings but some of the search parameters I like to use involved assembling several search strings and it took me a few hours to figure out how to do that. But now they are in my 'saved' search filter folder and I can pull up the results at the click of a button.

2012.03. FAQs for Short Selling and InteractiveBrokers. See Fool.com Short Selling FAQs for an introduction about the basics of short selling-including the specifics about the 'short squeeze.' Most books today seem to have the opinion it is better to use futures or options than traditional short selling, and even then, no more than 1/20 of a speculation account per position. Otherwise, one single incident of a stop order failing to process might set your entire portfolio back for a year. By the way, in case anyone is wondering how to short sell at Interactive Brokers: you simply sell something you haven't bought, that's all there is to it. You can look it up on an availability chart, but the interface automatically lets you know if it is not available. And you need to use the Trader Workstation (TSW), not the Webtrader, if you value your sanity. TSW is at first confusing-but simply open the 'Advanced Order Management' screen. This may take a few days to figure out, but in spite of the "advanced" denotation, the end result is far easier than the Webtrader. (Voice of experience.)

P.S. I strongly advise against any kind of short-selling for the average investor. I do some short-selling but if you want to take chances, focus on short-term small-cap long-buying. It has the same basic high-risk parameters without the open-ended risk. Merely by choosing stocks that are buy-rated by major fundamental analysts, and adding a few technical indicators, the raw odds are in your favor instead of against you 3/4 of the time. The best way to make money from a market crash is not by short-selling during the crash but by long-buying immediately after. On top of everything just mentioned, you never know when the crash will happen, but you always know when it has just happened. So you never really know when to short-sell, and the false starts will easily cost more than the eventual success. And for each time that the good time has finally happened for short-selling, that is a time when you do really know when to long-buy.

2012.02. Profit.ly. This is one of many sites of Timothy Sykes who evidently is a self-made millionaire, star contestant of a stock market reality show, and a day trader on the mirroring site Covestor.com. Profit.ly is supposedly a place to monitor and verify trading performance. But it is unclear to me whether someone can "past post" a trade, and for which the only correction is if others push a so-called "Madoff button"...? Perhaps it's me, but neither this nor anything else seems very clearly explained. You can read about Timothy Sykes at Wikipedia.org. Sykes founded a hedge fund that closed in 2007 after losing a third of its value. You also can study the performance record of Timothy Sykes at Covestor.com. Sykes made +56% in 2011 and +12% in 2010. However his average subscriber lost about -2% both years, because he is using penny stocks which Covestor will not mirror. You can also go to TimTradingChallenge.com and apply to become one of his students. Not for me though.

2011.10. Debunking assumptions about China and Saudi Arabia. This Fool.com article by Morgan Housel argues persuasively that China does not manufacture a large percentage of American consumer goods and America does not buy most of our oil from Saudi Arabia. However more clarifications are needed.

Are the economic figures comparable of Japan during the "Japan bashing" era vs. China today? And where is Japan now?

How is the USA doing from a subsistence perspective? I.e., perhaps the relationship of the USA vs. China needs to be compared with the relationship of country vs. metropolis within the USA. The independent farmer was at one time the soul of independence and life was dependent on him. Today he is like a serf for an agricultural corporation owned by urban billionaires while his children live like domestic servants working at Walmart owned by urban stockholders. Similarly, it can be deceptive merely to count up the UPS and Walmart jobs or retail values and compare these with Chinese manufacturing jobs or retail values. Morgan Housel does mention this, but greater focus is needed. Whether or not there is a serious net imbalance, it might or might not be a symbiotic relationship.

Similarly, the bottom line concerning oil might not be independence from Saudi oil, but independence from oil. It fascinates me that the same people who advocate hoarding gold and silver, from wherever it comes, sometimes seem to advocate burning away our black gold just as fast as possible.

2011.05. Commodities. According to "The Secret to Commodities Investing" at Motley Fool: Focus on the lowest cost producer, and ideally commodities trading below the cost of production. However things seem not so simple. The low-cost gas producers suggested in this article did not hold up well during the post-downgrade panic of August 2011.

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